Dollar Tree buying Family Dollar for $8.5 billion

Updated 5:35 pm, Monday, July 28, 2014

Photo: Joe Raedle, Getty Images

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MIAMI, FL - JULY 28: A Dollar Tree store is seen on July 28, 2014 in Miami, Florida. Dollar Tree announced it will buy Family Dollar Stores for about $8.5 billion in cash and stock. (Photo by Joe Raedle/Getty Images) less

MIAMI, FL - JULY 28: A Dollar Tree store is seen on July 28, 2014 in Miami, Florida. Dollar Tree announced it will buy Family Dollar Stores for about $8.5 billion in cash and stock. (Photo by Joe ... more

Photo: Joe Raedle, Getty Images

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A Family Dollar store in Hollywood, Fla.

A Family Dollar store in Hollywood, Fla.

Photo: Joe Raedle, Getty Images

Dollar Tree buying Family Dollar for $8.5 billion

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RETAIL

Dollar Tree buying rival

The fight for penny pinchers is intensifying.

Dollar Tree said Monday it is buying rival discounter Family Dollar for $8.5 billion, significantly broadening its reach as it looks to fend off Walmart, which has been stepping up its courtship of lower-income customers

The deal makes Dollar Tree the biggest player in the dollar store segment, with its more than 13,000 combined locations eclipsing current leader Dollar General Corp., which has about 11,300.

Dollar stores grew during the recession as people across income groups searched for cheaper options. To attract a broader array of customers, dollar stores also expanded their offerings to include more groceries and brand-name products, instead of just the party favors and other knickknacks people often associated with them.

More recently, however, sales at dollar stores have been suffering because the lower-income customers who go to them are facing persistent job instability and slow wage growth in the aftermath of the recession. Wal-Mart Stores Inc. and Kroger Co. also have been opening smaller store formats to directly compete with dollar stores.

Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, said Dollar Tree's deal will allow it to ultimately lower prices because it will be able to cut expenses by merging some operations. That will enable it to better compete with Walmart, which built its business on having everyday low prices.

"Now they're going to take the fight back to Walmart," Sozzi said.

NAMES

Bolt's plea to Instagram

A San Francisco company called Bolt is asking Instagram to not copy its name for an app.

"We don't want a legal battle over this, and we think it's not too late for you to consider an alternate name before launch," said Bolt CEO Andrew Benton, whose firm designed an app that lets users call each other for free. Benton shared his thoughts on his company's blog in a post titled "Dear Instagram."

Instagram, owned by Facebook, is known for its photo-sharing app. There have been rumors that Instagram will launch a one-touch photo messaging app, also called Bolt, Benton said in his blog post.

Instagram declined to comment.

Benton wrote that people are already downloading his app thinking that it's Instagram's product. That has created confusion, with some customers wondering if his company has been acquired.

"It wasn't too long ago that you were the little guy," Benton said. "Imagine how it would have felt if Google or Apple or Facebook had launched a photo-sharing app called Instagram in 2011."

AIRLINES

Fine proposed for Southwest

The Federal Aviation Administration said Monday it is proposing a $12 million civil fine against Southwest Airlines for failing to comply in three separate cases with safety regulations related to repairs on Boeing 737 jetliners.

Beginning in 2006, Southwest made "extreme makeover" alterations to eliminate potential cracking of the aluminum skin on 44 jetliners, the FAA said. An FAA investigation determined that Southwest's contractor, Aviation Technical Services Inc. of Everett, Wash., failed to follow proper procedures for replacing the fuselage as well as other work on the planes, the agency said. All of the work was done under the supervision of Southwest, which was responsible for seeing that it was done properly, the FAA said.

Southwest then returned the planes to service in 2009 and began flying them even after the FAA "put the airline on notice that these aircraft were not in compliance" with safety regulations, the agency said.

Southwest has 30 days to respond to the proposed fine. Usually FAA officials negotiate extensively with an airline in cases of large fines before settling upon an amount. However, regulators and airline officials sometimes are unable to reach an agreement and the airline contests the fine.

BRIBERY

Firearms firm OKs settlement

Smith & Wesson has agreed to pay $2 million to settle civil charges of bribing government officials in Pakistan, Indonesia and other countries to win military and police business.

The Securities and Exchange Commission announced the settlement Monday with the firearms maker, which fired its entire international sales staff after the alleged violations came to light. Smith & Wesson Holding Corp., based in Springfield, Mass., neither admitted nor denied wrongdoing.

As the company pushed to break into new foreign markets from 2007 to 2010, its international sales staff made a concerted effort to get new business by offering or making illegal payments to government officials, the SEC said.

The SEC accused the company of violations of the Foreign Corrupt Practices Act, which prohibits bribery of foreign government officials or company executives to secure or retain business.

The agency said Smith & Wesson hired a third-party agent in Pakistan in 2008 to help the company secure a deal to sell firearms to a police department. Company officials authorized the agent to give guns worth more than $11,000 as gifts to Pakistani police officials, in addition to cash payments, the SEC said. The company made $107,852 on the resulting contract to sell 548 pistols to the police department.

REAL ESTATE

Home sales may be cooling

Fewer Americans signed contracts to buy homes in June, as the real estate market appears to have cooled off.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index slipped 1.1 percent to 102.7 last month. The index remains 7.3 percent below its level a year ago.

Sales have been slowed by a mix of meager wage growth, rising home prices and mortgage rates that rose steadily through the end of last year.

Signed contracts in June fell in the Northeast and South. They rose slightly in the Midwest and West. Pending sales in all four U.S. regions are below last year's pace.

FITNESS

Equinox will get more gyms

The high-end fitness industry may be awash in trendy concepts - CrossFit, boot camps and the like - but one of the biggest players in the luxury gym market is continuing to expand all the same. Equinox Fitness, the purveyor of expensive workout centers and risque advertising, said it planned to announce as soon as Monday that it had acquired Sports Club/LA gyms in New York and four other cities, as well as the Reebok Sports Club/NY gym on the Upper West Side of Manhattan. All will soon bear the Equinox brand and feature the company's classes and products.

The $110 million deal, Equinox's second-biggest acquisition, is for the remaining gyms owned by Millennium Partners, the real estate company that sold half of its clubs to Equinox three years ago. That transaction was Equinox's biggest deal. More important, the new deal expands Equinox's empire to 73 locations worldwide, primarily in major cities like New York, San Francisco, Los Angeles and London.

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